Patricia Maganu
12 September 2008
Francistown — A Nobel Prize Winner has told the National Business Conference (NBC) at the Tati River Lodge here that increasing agricultural production would not help lower food prices and that the Botswana government could do more in terms of localisation and the economic empowerment of Batswana.
The BOCCIM-sponsored conference ended yesterday.
Professor Joseph Stiglitz of Columbia University in the US, a former World Bank chief economist who won the Nobel Peace Prize for economics in 2001, said because food prices were determined on the international market, increased production was not likely to push them down.
"Those prices are internationally set, and even if Botswana produced more food, the prices would not go down," Stiglitz said. Because the issue of escalating food prices was international, it may not help much even in countries willing to go back to the days of producing more as there were other factors involved.
More production might help individual farmers become more self-sufficient, but would have very little influence on food prices. In an interview with Mmegi, Stiglitz said prices were hard to control because of how they were set.
"It is hard to disconnect local prices from international prices in an open economy," he pointed out, but conceded that producing more could help the Botswana government a little by reducing its food import bill.
One of the issues Stiglitz tackled was localisation, saying the government could do more by reinforcing laws to help localise jobs and empower Batswana.
"If localisation is a problem, the government may have to introduce a human development programme to say if an investor hires foreigners, it has to be at a minimum," he said, "and a programme for the training of Batswana."
The government had a duty to ensure that companies that came to Botswana empowered Batswana and reduced their expatriate component. "There has to be a positive agenda assessment," he emphasised.
On the correlation between the GDP and living standards, Stiglitz said the GDP could not measure the income of citizens and was therefore misleading. If the GDP went up, it did not necessarily mean that the country was doing better.
"(In fact), the GDP can go up while the country is doing badly or even worse," Stiglitz said. GDP is an even worse measure in areas like mining.
"GDP does not give an indication that growth is sustainable," he said. "GDP can go up while a country is privatising national assets and the same time consuming them. GDP will go up on the consumption boom or on borrowed money."
But in spite of his critical views on Botswana, Stiglitz commended the government for maintaining a stable economy in the face of many hindrances. "For a landlocked country and other challenges, Botswana has done remarkably well over the past 45 years," he said.
Even so, Botswana would still face challenges as far as the economy went, especially with regard to diversification. "The country has had a hard time succeeding (with diversification) because of problems of the environment and frequent droughts," Stiglitz said, "and it is not easy to go forward."
On private sector development, he noted the issue was not a problem only for Botswana; private sector development had been a problem throughout Africa as it took a while to develop an entrepreneurial spirit.
However, Stiglitz said improvements were visible because there had been an emphasis on private sector development and a learning process on how to diversify in recent years.
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